The National Company Law Appellate Tribunal, New Delhi Bench (“NCLAT”), in its judgment dated March 19, 2026, in SPS Steels Rolling Mills Limited v. Central Bank of India, Comp. App. (AT) (Ins) No. 352 of 2024 with Comp. App. (AT) (Ins) No. 353 of 2024 dealt with the issue of the treatment of assets of a corporate debtor that were not disclosed in the information memorandum during the corporate insolvency resolution process (“CIRP”) under the Insolvency and Bankruptcy Code, 2016 (“Code”) but were discovered after approval and implementation of a resolution plan.

Factual Background

The corporate insolvency resolution process (“CIRP”) of SPS Steels Rolling Mills Limited (“Corporate Debtor”) was initiated pursuant to an application under Section 7 of the Code, which was admitted on December 22, 2017. Shakambhari Ispat and Power Limited, the successful resolution applicant (“SRA” / “Appellant”), submitted its resolution plan on May 9, 2018. The resolution plan submitted by the SRA was approved by the committee of creditors (“CoC”) and subsequently approved by the National Company Law Tribunal, Kolkata Bench (“Adjudicating Authority”) under Section 31 of the Code on April 8, 2019. Consequently, the SRA took over the management, properties and assets of the Corporate Debtor on or about April 11, 2019. In 2020, the Appellant discovered certain fixed deposit receipts (“FDRs”) maintained by the Corporate Debtor with Central Bank of India and Indian Overseas Bank (“Respondent Banks”) as margin money for bank guarantees.

This led to the Appellant initiating proceedings under Section 60(5) of the Code seeking release of the FDRs. The Adjudicating Authority, by its order dated December 21, 2023 (“Impugned Order”), rejected the applications and directed that the matter be placed before the erstwhile CoC for distribution as per their commercial wisdom. Aggrieved by the said order, the SRA preferred the current appeal before the NCLAT.

Appellant’s Contentions

The Appellant argued that the FDRs had been created as margin money for bank guarantees availed by the Corporate Debtor prior to the CIRP of the Corporate Debtor, which bank guarantees have all expired. These FDRs were neither disclosed in the information memorandum nor considered during the CIRP of the Corporate Debtor. The Appellant further contended that the Respondent Banks were members of the CoC who had already received their dues in accordance with the approved resolution plan, which has been fully implemented. The Appellant urged that the Adjudicating Authority had failed to appreciate the fact that the FDRs lying with the Respondent Banks were in the name of the Corporate Debtor and were therefore assets of the Corporate Debtor.

Respondent Banks’ Contentions

The Respondent Banks contended that, since the FDRs were not a part of the information memorandum and consequently the resolution plan, the Respondent Banks had adjusted the same towards settlement of the Respondent Banks’ dues and the Appellant could not claim any rights of the said FDRs.

NCLAT’s Decision

The short question before the NCLAT was “who would own the assets of the Corporate Debtor, which have not been part of the information memorandum”. At the outset, the NCLAT noted that the FDRs shall be considered as the assets of the Corporate Debtor and relied on the case of Indian Overseas Bank v. Arvind Kumar, (2020) SCC Online NCLAT 666, wherein it was held that if a bank guarantee expires without being invoked, then the margin money reverts back to the borrower.

The NCLAT further reasoned that the clean slate doctrine established in the case of Ghanashyam Mishra & Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited, 2021 SCC Online SC 313, is applicable to the liabilities of a corporate debtor or the extinguishment of claims against a corporate debtor for the simple reason that a corporate debtor cannot be saddled with uncertain liabilities arising in future. However, the same doctrine may not apply to the assets, which may come to the notice of a corporate debtor post approval of the resolution plan.

By analysing Regulation 36 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”), the NCLAT further observed that, unlike “contingent liabilities”, the term “contingent assets” does not find any place in Regulation 36 of the CIRP Regulations. The NCLAT noted that there was no provision in the information memorandum which stated that any assets not specified therein will not be passed on to the SRA and the SRA was not bound by law to submit details of the assets being taken over.

The NCLAT, while setting aside the Impugned Order held that “In the present appeals, we note that the FDRs were created by the Corporate Debtor as margin money for the purpose of bank guarantees, which have already been expired. Logically, such FDRs could not have become property of the Respondent banks and rather can be viewed as assets of the Corporate Debtor. We hold that the Respondent Banks have no right to "adjust" such balance after the Resolution Plan has been fully implemented.” (emphasis supplied)

Conclusion

The NCLAT's decision represents a significant departure from its earlier judgements in the cases of IFCI Limited v. Raju Palanikunnathil Kesavan, Company Appeal (AT) (Insolvency) No. 740/2023 and Masatya Technologies Private Limited v. Amit Agarwal, Company Appeal (AT) (Insolvency) No.1688 of 2023, wherein upon discovery of additional assets, the resolution plan was rejected and a fresh process (including approval of the CoC) was directed to be undertaken. This judgment, however, adopts a more pragmatic approach, establishing that subsequently identified assets do not ipso facto warrant reopening the CIRP or invalidating an approved resolution plan.

Please find attached a copy of the judgment, here.

This update has been contributed by Nidhi Arya (Partner) and Dharani Maddula (Associate).

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